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The localization of entrepreneurship capital: evidence from Germany

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Whereas initially physical capital and later, knowledge capital were viewed as crucial for growth, more recently a very different factor, entrepreneurship capital, has emerged as a dri-ving force of economic growth. In this paper, we define a region s capacity to create new firms start-ups as the region s entrepreneurship capital. We then investigate the local embedded-ness of this variable and which variables have an impact on this variable. Using data for Ger-many, we find that knowledge-based entrepreneurship capital is driven by local levels of knowledge creation and the acceptance of new ideas, indicating that local knowledge flows play an important role. Low-tech entrepreneurship capital is rather increased by regional un-employment and driven by direct incentives such as subsidies. All three measures are locally clustered, indicating that indeed, entrepreneurship capital is a phenomenon that is driven by local culture, and is therefore locally bounded.

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David B. Audretsch, Max Keilbach

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Adapt according to the presented license agreement and reference the original author.